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A recent article in the Atlantic has once again brought up the question as to whether the euro can survive (and generated a fair bit of discussion in the comment section). This is a debate that is on-going, of course. In fact, I was in the markets back when the single currency was launched and can say that even then there were a lot of people who didn’t expect it to last for any length of time (certainly not as long as it has done so far). That pessimism was part of what saw EUR/USD dive to near 0.8200 in the year 2000.

The Atlantic article brings up a common refrain in the arguments why the euro must eventually go away – namely the lack of an exchange rate adjustment mechanism to allow struggling economies like Greece to become more competitive through currency devaluation. Now in part that can come from a weaker euro. That hasn’t come against the USD to be sure.

The euro started life with an exchange rate to the dollar near 1.17, but since the market recovered from the initial decline it has only once dipped back below, and even then just fractionally and briefly. Despite all of the problems that have been well documented in the Eurozone since the Financial Crisis, the euro has remained quite strong against the greenback, albeit in a volatile fashion. Likewise for the pound.

There has been considerable euro devaluation against some currencies, however. The euro has really been beaten up against the commodity currencies such as the AUD and CAD. Given the strength in commodities in recent years, and the EZ issues, this is to be expected. The weakness of EUR/JPY is tied in to what many folks see as the inexplicable strength of the yen despite serious problems in the Japanese economy as well. And of course EUR/CHF got so weak because of flight to quality flows that the Swiss National Bank had to support the euro and put a floor under the cross. We have also seen declines in the likes of EUR/NOK and EUR/SEK, which are probably better reflective of exchange rates among real trading partners.

Unfortunately for those countries in the Euro Zone struggling, the weaker euro is only partially helpful. The Atlantic article observes that when excluding Germany a bit over half of all EZ trade is done within the zone. The weak euro has little impact on that fraction of trade, though it definitely helps the more externally export oriented countries (like Germany). Cyprus cannot become more price competitive to potential tourists from Europe because they do not have their own currency to depreciate.

Of course, as we have witnessed in the case of Japan, having your own currency doesn’t automatically mean you get the kind of devaluation you’d like to get to make your export goods more price competitive. The UK also struggled with a persistently strong(ish) pound when the Bank of England really wanted it to fall (though without actually saying so explicitly).

And not that currency devaluations are the quick fix some folks seem to think they are. It’s would be a very messy process in the case of a country exiting the euro – one that could actually make matters worse in the short-term. Just think about what would have to happen to all of the debts and obligations currently contracted in euro terms if a country like Greece exited the single currency. If a Greek company had a euro-denominated obligation and a new drachma devalued by 50% from where it came into the euro, it would be like that company’s obligation doubling!

But politics are very likely to be the major factor here.

There are considerable cost savings to being part of the EZ, not to mention a growing support infrastructure now. Plus, for countries like Germany who do considerable external export business, there is a major benefit to having a currency which is relatively weak. For these reasons and many others, there is going be a strong reluctance among the politicians to break up the euro. As a result, don’t look for it to happen any time soon. Even the expulsion of a single country presents problems as the ECB has repeatedly said there is no mechanism for doing so. Just imagine how long it would take to create that mechanism. Do you want to place bets on politicians moving with haste and expediency when all they have shown thus far is a proclivity for drawing things out?

This doesn’t mean one can’t bet against the euro from an exchange rate perspective. I just wouldn’t hold my breath waiting for the thing to come apart.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

As a change of pace, I thought I’d use this post to do a little bit of market analysis looking at the market from a different perspective than the ones most often used. This type of analysis focuses more on time spent (or volume transacted) at certain levels rather than looking at simple progression of where it’s been over time as we generally see in bar and candlestick charts.

The chart below shows how EUR/USD has traded since February. Each of the clusters you see represents the distribution of trading over one month’s time. I won’t go too far into the details, but suffice it to say that the fatter a month’s distribution at a given price level, the more days the market traded at that prices, and the thinner the distribution the fewer days the market traded at that level. Think of it this way. If the market spends a lot of time at a price level it indicates agreed upon value in which both buyers and sellers are willing to transaction. Where the market doesn’t not spend much time it indicates rejection by one side or the other – value not agreed upon.

What we can see above is a trio of short, fat distributions for February, March, and April that indicate pretty narrow range trading. Then, in May, we have a long, thin distribution indicating a trend move lower. June was again mainly a consolidative month, but July started off with a trending action, then transitioned into more of a ranging set-up.

The July distribution indicates that things changed in EUR/USD near the beginning of the month and previously accepted value between about 1.2400 and 1.2700 suddenly became rejected. The market then move down to where valued was agreed upon below 1.2400.

Let’s put this in some common parlance. Think of the thin distribution of prices between 1.2350 and 1.2500 or so as a key resistance zone for EUR/USD. Selling interest far exceeded buying interest the last time the market moved through that zone. If the market can work back up there and hold the move it would tells us things have shifted and that buyers are starting to be more interested.

The concern I have, though, is that we don’t have as clear a rejection area to the downside to indicate a price level the sellers clearly found too low and/or where the buyers became much more aggressive. We have to go back to June 2010 to find the last time the market was down this low. Back then there was a final rejection near 1.1900. I think the risk, therefore, is that EUR/USD makes another move down to test those prior rejection lows.

The struggle, though, will be breaking away from the 1.2300 area. As the chart above shows, the market spent a lot of time around there in May/June of 2010. That makes it a significant attraction zone, which we’ve been seeing play out this month. If the market can start to develop more value below 1.2200, though, the odds for a run at 1.19 will increase.

There’s a bit more nuance to this type of market analysis, of course. If you find it interesting, you can learn more about it here.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

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Despite yesterday’s surge in investor confidence that provided Asian markets a boost, things appeared to have fallen a bit flat this morning. As reality set in that Spain’s bond yields have hit record-breaking highs and Greece’s electoral success might not be enough to negate prior monetary upset, investor’s optimism wasted no time in fizzling out.

Bloomberg reported early this morning a slip of 0.8 percent in Japan’s Nikkei 225 Stock Average, 0.1 in Hong Kong’s Hang Seng Index, and 0.7 in China’s Shanghai Composite Index. Tim Riordan of Australian hedge fund Parker Asset Management Ltd., elucidated how he sees European problems increasing, as opposed to reaching a resolution. With bond yields hitting 7.29 percent, Spain is becoming somewhat of the elephant in the room. Riordan states that this is could really be a red flag indicating a downward spiral should be reason for caution.

Borrowing costs of this caliber can be indicative of a country potentially in need of a bailout in the near future. Despite the notion of this possibility, European markets were able to rise Tuesday. Currently, the strongest fear amongst investors seems to be a contagion of Spain’s monetary battles over to Italy, who’s facing issues of its own.

A few weeks back I happened upon a very economically fitting Warren Buffett quote assuring American’s they needn’t fear a recession relapse lest things in Europe get out of control and leech into the US economy. If investors’ uneasiness over debt spilling across Europe is foreshadowing for imminent future fiscal events, will Buffett’s words prove true?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

The events of this past weekend were pretty monumental for the world currency industry (and the world in general). Up until Greece’s Sunday elections, animosity regarding the stability of the euro in the event of a Greek exit had been running rampant amongst investors.

Now, with the results finally established, they were able to enjoy a brief moment of revelry in the electoral success of the pro-bailout New Democracy party.

An Article in The New York Times provides a good outline of what potentially could have happened to the euro had the leftist Syriza party won. Vowing to repudiate the country’s bailout agreement with the “troika” of the European Union, the European Central Bank, and the International Monetary Fund, this move would have siphoned financing of Greek banks. In turn, this would have rendered them unable to continue operating and eventually drop the euro and revert back to the drachma.

But alas, this was not the case, and so being within hours of the election, investors applauded the win by reorienting the falling euro in a much-needed upward direction. Unfortunately, the vivacity didn’t carry into Monday market action. The euro fell flat once again as concerns regarding Spain’s astronomic bond yields crept back into investor’s psyches. With interest rates having breeched the 7 percent mark, these loans are being viewed as unsustainable.

But amongst the angst, some positivity prevails arriving in the form of Asian market success. Emerging Asian currencies gained as a result of investor’s newfound comfort in the pro-bailout results, enthusing them to add a few riskier assets. Overall, Asian markets experienced widespread lifts with the Japanese Nikkei index prevailing with a rise of almost 2 percent.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

Today’s roster of top tier bulge banks holds some of the most colossal and well-known institutions in finance. JPMorgan Chase & Co., Deutsche Bank, Citigroup Inc., Morgan Stanley and Goldman Sachs; a few names that everyone’s heard, and almost everyone has an opinion about (usually in regards to their size). Of late, JPMorgan and Morgan Stanley have been receiving the majority of media flack with the whole $2B trade loss and Facebook equity underwriting investigation.

Though one bank has been doing a very good job at laying low for the past few months, and it wasn’t long ago that Goldman Sachs could hardly keep itself out of the news for more than five minutes. So one must wonder now, without the media blowing them up left and right, what has this large investment bank been up to?

A CNBC article answered this question by revealing that the bank has been doing a good job of being well, not so large. This fall, the firm is said to name less than 100 new partners; a group of higher ups at the firm that’s shrinking steadily. After scrupulous vetting of these potential hires, the selected few are compensated handsomely (senior partner and CEO Blankfein pulled in an annual salary of $12 million in 2011) while gaining access to prestigious jobs at the firm. This alone would make one question why over the past year Goldman has seen a steady exodus of those employees fortunate enough to hold partner positions at the bank.

After reducing its total employee count by about 8 percent in the last year, as well as laying off about 50 last week, it’s clear that something is amiss with the firms growth pattern. As Goldman deflates as a whole in size, the heft of its partnership base usually lessens in congruence.

So where is this drastic size reduction coming from? Greece.

A few weeks ago, I wrote a post about how a potential Greek euro exit would likely affect the US. One of the main concerns was that it could set in motion a widespread panic amongst investors, who would then impulsively retract their allocated capital. Today, a Bloomberg article showed evidence of this theory starting to make its presence known.

The piece provided insight about how European turmoil is directly correlated to success amongst the investment banking industry. More specifically, the article looks at Greece and their potential abandonment of the euro for a return back to the drachma.

A Goldman analyst showed last week that for a third year straight, revenue from investment banking and trading is in danger of dropping at least 30 percent from the first quarter. The deadly combination of deal volume slowing, wider credit spreads, heightened volatility, and equity and credit markets falling, can all be traced back to fears of a Greek euro exit, followed by the spread of the European sovereign-debt crisis. These ingredients are the direct result of investors putting themselves into a defensive monetary state over the aforementioned euro woes.

This tension is taking its toll on the paychecks of investment bank employees, as 11 analysts reduced earnings estimates for the New York based Goldman Sachs in the past four weeks. The question now is whether these declines are cyclical, or indicative of a general phasing out of the investment banking industry. Boston Consulting Group, Inc. stated in late April that banks of this kind will see very little revenue growth during the next few years and will be forced to cut up to 30 percent of their managers.

Jamie Dimon and Lloyed C. Blankfein, CEOs of JPMorgan and Goldman Sachs respectively, are in adamant agreeance that this is, of course, is nothing more than a phase and the industry will undoubtedly bounce back. David Konrad, an analyst at KBW Inc. in New York, gives a bit of hope to the fighting back of these banks by pointing out that due to their large amounts of capital and strong liquidity, any program coming out of Europe that the market responds positively to will inevitably have a bold impact on valuations. He recalls how stocks have been known to jump up to 30 percent on just a bit of breathing room.

So could all of this drastic shrinking represent the end of the age where grand investment banks rule the financial industry?  Or is it in fact no more than a shock absorption effect occurring as they bend to accommodate European turmoil? As we all know, yes, they are big. But are they really too big to fail?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

Our Two Cents – Week of 5/29/12

Summer has arrived. After last weekend’s gorgeous weather in Boston as we honored Memorial Day, we erased our cravings for hamburgers and hot dogs and replaced them with hunger for some knowledge of the currency markets.

In the U.S., economic optimism continued. The May Thomson Reuters/University of Michigan’s index on consumer sentiment rose to its highest level in four years. According to the survey, consumer sentiment increased to 79.3 from 76.4 in April. The highest jump since October 2007, the survey also showed half of all consumers felt the economy has improved during the last year. Jobless claims, which remained at 370,000, also illustrated economic stability.

While conditions in America painted an optimistic picture, images abroad weren’t cast in the same stroke. Greece remained much of the focal point as the country devised plans for a parallel currency to the euro, should it withdraw from the region. Sergey Shvestov, vice president of Russia’s Central Bank, said Greece’s departure from the eurozone was necessary, and it would be a “good example” for other countries. Facing discussions about debt issuances, German Chancellor Angela Merkel defended her opposition about why bonds won’t solve the eurozone’s problems, saying such tools wouldn’t get to the root of the problem. Ultimately, the Organization for Economic Cooperation and Development warned the 17-member region that a severe recession looms if its governments and central banks don’t act quickly to improve economic conditions.

For hedge funds, an overwhelmingly majority of them added compliance staff since 2008, according to a new survey. Hedge fund redemptions for May 2012 upped 3.31 percent, according to the GlobeOp Forward Redemption Indicator.

• Consumer Sentiment Rises to Highest Level in Four Years, The New York Times, May 25, 2012
• Greece Already has Plan for Parallel Currency to Euro – Russian Central Banker, Forex Crunch, May 25, 2012
• Overwhelming Majority Of Hedge Funds Add Compliance Staff Since ’08, FINalternatives, May 24, 2012
• Jobless claims little changed last week, Reuters, May 24, 2012
• Merkel: Makes No Sense To Solve Problems With Euro-Zone Bonds , The Wall Street Journal, May 24, 2012
• Euro zone officials agree to prepare for Greek exit scenario, Reuters, May 23, 2012
• Hedge Fund Redemptions Up In May, FINalternatives, May 22, 2012

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

An article on CNNMoney about Greece’s pending decision on exiting the euro (or the “Grexit,” as it is called) brought up a very good question: why isn’t more attention being paid to what the country’s choice will mean for the US? The clock certainly has not stopped ticking and the election that will likely make or break the country’s euro membership is set to take place next month.

Well, the good news is that in terms of trade, the US economy will hardly feel the tremors produced by the potential Grexit threat, should it materialize. Only a meager 0.1% of American exports go to Greece, with 14% going to the euro zone in general. If Europe is shaken by their decision, US trade should come out relatively unscathed.

The place of worry with this situation is actually a bit more speculative. Economists fear that should a Grexit occur, it could trigger big time panic amongst investors, who will then make mad dash bank runs, which in turn will further disrupt the Euro that includes bigger debt-laden countries. How’s that for looming dark cloud syndrome?

With over 20% of all loans that happen in the US coming from European banks, a debt selloff could potentially hinder their willingness to lend. Though US banks have been actively reducing their exposure to peripheral euro zone countries, a great deal more exposure to the wider euro zone in general still remains.

Does this mean the US should really start focusing on a contingency plan should Greece decide to return to the drachma?

View the full article here.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

Even if one is a short-term trader, it is worth taking a look at the longer-term chart from time to time to see how things are developing in the higher time frames. My daily work has me usually focusing on daily and intraday charts, but now and again I’ll flip over to the weekly chart to gain that broader perspective. The thing I noticed today was an interesting development on the weekly USD Index chart.

As you can see below, the Bollinger Bands in that time frame have been getting progressively narrower since about the first part of the year. They are now very narrow. In fact, on a relative basis (as shown by the purple Band Width Indicator sub-plot) they are as narrow now as they got late in Q3 last year. Notice what happened then.

Since the USD Index is heavily weighted to the euro, we basically see the same narrow-Band situation for EUR/USD as we do for the index – just with the chart inverted.  We see similar tight Bollinger set-ups in GBP/USD and USD/CHF, which isn’t too much of a surprise given how closely related those currencies are from a fundamental (and central bank) perspective these days.

The interesting thing, however, is that once you get outside the European currencies the story is different – considerably so in some cases. The narrow-Band situation actually produced a major breakout in USD/JPY earlier this year. Now we’re seeing the market consolidate after its powerful rally.

In the case of AUD/USD, we’ve got a market basically working through a sizeable range that’s been working since the highs were put in last year. We’re now seeing the market having turned down from its latest swing up, looking quite like it’s headed back for the bottom of the zone.

If we flip AUD/USD over we get a pretty close approximation of how USD/CAD has traded. There difference, though, is in the recent action. Where the Aussie has been selling off, the Loonie has been holding steady over the last couple of months.

So what does this all seem to say?

My interpretation would be this. The relatively better performance of the CAD vs. the AUD is indicative of at least the perception of the situations with the US and China respectively. These currencies are seen as closely linked via trade to their large neighbors, so as the US data has gotten better, the CAD has been supported, and as the China data has disappointed, the AUD has weakened.

Japan is largely its own situation. There is certainly some impact from China there, but mainly the yen trades as a function of two things. One is the stagnant economy in Japan, which is showing little sign of doing anything any time soon. The other is US interest rates. The correlation between USD/JPY and the US 10yr yields is quite strong as higher US rates make the yen more attractive as a carry trade funding currency than the dollar, plus more attractive for investment returns.

Then there’s Europe. To my mind, the ranging we’ve seen in the major pairs there is reflective of the markets getting a handle on where everything stands. We’re basically waiting on the next meaningful development. My guess at this point is that will have more to do with the US than it will Europe. I say that because the market seems to see the Eurozone issues as pretty clear with little change expected out of the ECB for a while. If anything the leaning is toward further loosening of policy by that central bank.

In the case of the US, though, the situation is on more of a knife’s edge. As we saw from the reaction to the FOMC meeting minutes Tuesday afternoon, there have been a number of market participants looking for another round of QE3 from the Fed (including the likes of Goldman Sachs). At the same time, though, we have others who see the US on a good sustained growth path. The USD is likely waiting to see which side is going to win that argument. How the USD Index moves out of its current consolidation will be indicative of which way that fight ends up going.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

This is our fifth and final installment of the trade leader interview series. In this post we ask three of our Trade Leaders what they think about volatility, trading strategies and the Euro. The traders are Janus Investments (Ticker: JASMI.I), Chen Investments (Ticker: CHCMP.S) and BAK Trading (Ticker: TCBRF.A).

1. Do you believe 2012 will be as volatile as the end of 2011?

Janus: 2012 will bring more volatility than 2011, but in a smaller range than 2010 and 2011, because central banks will intervene to dampen volatility trying to set upper and lower boundaries.

Chen: Yes, it will be more volatile.

BAK: Yes, but volatility will only be 60-80% as 2011′s ending months. The most volatile period is probably already over.

2. What types of Forex strategies will continue to prevail in 2012?

Janus: A portfolio of different non-correlated strategies will work in any market.

Chen: I think any strategies which can live well in 2011 will still have a chance in 2012, but we have to adjust our strategies to suit a riskier market.

BAK: Scalping and swing. Position trading will not prevail in 2012.

3. What would a breakup of the euro mean for your strategy?

Janus: No change, our strategies are not based on long-term trends (monthly, yearly), but on short-term price action (intraday).

Chen: This is something tough for us to think about. I feel the only thing a trader can do is have proper “stop losses” in place.

BAK: Not much as I only focus on ultra short-term changes of major pairs. The Euro currency should still be around, at least for Germany, France, and a few other countries.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

This is the fourth installment of our trader interview series.  Currensee Trade Leader Adantia LLC (Ticker: ROCED.A) uses strategy that stems from their strong background in software development and is evident in their fully automated trading approach. Their founding team has over 20 years of experience in the software industry, and this is one of the company’s core strengths and differentiators. Adantia lets the software do all the work but plays close attention to the events that may impact the strategy so they can see how the model reacts.  Over the past two years we have experienced a number of “shocks” including the Flash Crash, the Japanese Tsunami, Quantitative Easing I, II and III, North Korea shelling Yeonpyeong Island, etc. and Adantia’s Foreign Exchange Volatility Strategy has performed well and adapted to these shocks.

Do you believe 2012 will be as volatile as the end of 2011?

Yes, most of the issues that have contributed to the volatility have not been resolved and will take considerable time and effort before they are resolved:

• The Eurozone crisis is still in full swing.  Greece, Spain, Italy and Ireland have significant issues which will drag on the EUR for some time.  The new governments in Italy and Spain seem to be taking some of the right steps, but there is still much uncertainty.
• The Middle East is a mess.  Iran is working to become a global nuclear power, the U.S. has pulled out of Iraq and the succession of the leadership in Saudi Arabia is now in doubt.  The world still runs on oil and all of this uncertainty can rip around the markets.
• North Korea is more of a wild card than ever.  The world knew Kim Jong Il pretty well after all of his time as the Supreme Leader.  Kim Jong Un is a virtual unknown, and the country is not getting any healthier from an economic standpoint.  This could be very bad news for South Korea and ultimately most of the world.
• In the U.S. we have an election going on, so much will be done to spur on the U.S. economy so that the current leaders can get re-elected, BUT, many of the problems that we have in the U.S. are just being kicked down the road for the next leader to handle.  I expect employment numbers will get better throughout the year which will have a positive impact.  The partisan fighting in Congress will cause significant tension in the U.S. markets and if the leaders don’t come up with solutions then the markets are going to react.  Also, it will be interesting to see what the climate is for regulation in the U.S.  With the collapse of MF Global, U.S. Regulators could clamp down, which will have an impact on the markets as well. The Real Estate crisis in the U.S. is far from over.  The Banks own a lot of property that has yet to hit the markets and this will have a big impact as well.  Will Real Estate ever be a safe investment?

2. What types of Forex strategies will continue to prevail in 2012?

At Adantia, we think our strategy is well positioned to take advantage of the volatility that is inherent in the market.  We have been very successful over the past two years taking advantage of the tumultuous market.  We also believe that a well-diversified portfolio is a wise choice.  Alternative asset classes like FOREX can be a very important part of any portfolio and can produce returns that are not correlated to other investment types.  Within FOREX we believe investors should look to diversify using complimentary strategies.  Our Foreign Exchange Volatility Strategy tends to be counter-trend and is well complimented by trend following strategies.

3. What would a breakup of the euro mean for your strategy

Personally, I do not believe the Euro will break up.  I believe Germany and France will do whatever it takes to keep the European Union together.  The German people very successfully combined East and West Germany, and while that process was very painful, in the end they came out much stronger.  This is a different economic battle with many more countries involved, and it will be very painful, but, in the end the whole region will be stronger if the European Union is maintained.  The EUR/USD pair is a big part of our current strategy, so if the Euro were to break up we would have to remove that pair from our strategy.  We are confident that with research we could replace this pair, but it would take some time. No one can predict the future, so investors would do well to diversify and monitor their portfolios closely.  It is important when selecting different managers to make sure you are not getting too much overlap in the strategies the managers are using to truly diversify your portfolio.  This means the investors will have to do some legwork to understand the strategies the managers are using to get the returns.  Here’s hoping 2012 is a great year for everyone!

Next week: Janus Trading (JASMI.A), Chen Investments (CHCMP.S) & Bak Trading (TCBRF.A)

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.